Refinancing your home
Want to save on your interests, reduce your loan term or consolidate your debt? There are plenty of reasons why refinancing your mortgage loan may sound like a good idea. Mike Credit prepared some tips to help you figure out if now is the right time for a home loan refinance.¬†
When should you refinance?
Be careful with your credits
Check out if your credit score is in good shape. Mortgage rates largely depend on your creditworthiness. Even if you discover a lucrative deal, it doesn't necessarily mean that you will qualify for that offer, and refinancing your home loan with bad credit score may not work for you. So, regularly review your credit reports to verify that your payments are made on time and you did not exceed your credit limit.
Chase financial advantages
Outline the exact reasons for refinancing before you contact a lender. Since the mortgage rates change every day depending on the market trends, the most common reason for refinancing is getting a lower mortgage rate. Also, if you currently have an adjustable-rate mortgage (ARM), you may want to convert to a fixed-rate mortgage and pay lower interests for a longer period. Vice-versa, switching from a fixed-rate mortgage to ARM could help you save on interests in a falling interest rate environment. Finally, if your borrower profile has significantly improved, it may be advisable to refinance in order to have better loan conditions or a shorted mortgage term.
Think twice about conditions
Consider the tax consequences of a refinance. With lower interest fees you will get smaller tax deductions, so do the math to see if there are more benefits than losses.
Find out if your current loan has prepayment penalties, and learn about refinancing costs that may differ from lender to lender. If these costs recoup the potential savings, it may be not worth refinancing.
Mortgage refinance can be an excellent tool to gain control over your debt. If after considering the questions above you inferred that the advantages of refinancing are greater in comparison to its downsides, then use our online tool to check out the leading home loan refinance options.